RBI devolves bonds in auction, dodges market demand for higher yields

Central bank signals that it is no longer willing to continue with its easy money policy

The RBI forced underwriters of government bond auctions to buy nearly a third of the instruments on sale Friday, as the markets demanded higher yields.

Out of the Rs 24,000 crore bonds on offer in the auction, the central bank devolved, or let the underwriters buy Rs 7267.683 crore. That is about 30 per cent of the total bond auction mainly at the medium-term maturity segment. The last such devolvement had happened on July 30.

“The signal to us was very clear. Don’t be opportunistic,” said a senior bond dealer with a private bank requesting anonymity.  

Bond yields have climbed